One year ago, America's president
said he was going to start a green-energy revolution. Here's why the Obama
administration failed -- and what needs to come next.

By Ted Nordhaus<p>
Ted
Nordhaus and Michael Shellenberger are authors of Break
Through: From the Death of Environmentalism to the Politics of Possibility and founders of the Breakthrough Institute.
</p>
, Michael Shellenberger

January 13, 2010

There was good reason to be hopeful in January 2009 that the election of Barack Obama would bring about America’s long-awaited clean energy revolution. As president-elect, Obama had started to talk about energy policy in a way that no leader of either U.S. party had before. Promising to save the country from both severe recession and industrial decline, Obama described the transformation of the United States’ energy economy as a defining challenge of his presidency — an economic and national security imperative that Congress would fail to address at the country’s peril.

But the reality fell far short of expectations. The Obama administration succumbed, like many others, to a sort of magical climate thinking that promised a painless and even prosperous transition to a low-carbon future with the tools already at hand. The only official within his administration to accurately grasp the technology challenges faced, Energy Secretary Steven Chu, was sidelined at crucial moments.

Here is the back story of how the Obama administration dramatically raised and then dashed America’s — and the world’s — hopes that 2009 would be a pivotal year for remaking our collective energy future.

One year ago, in his first State of the Union address, Obama proposed a previously unprecedented $15 billion annual investment in clean energy research and development. Further, he appointed a technologist, the Nobel Prize-winning physicist Chu, as energy secretary to oversee that investment. The $800 billion stimulus, passed shortly thereafter, gave further credence to the notion that after 30 years of false starts, overblown rhetoric, and outright neglect, Congress and the president might finally get serious about remaking the United States’ energy economy.

The stimulus included billions for energy R&D, infrastructure, and efficiency, and overturned the conventional wisdom that the United States would never again make big federal investments in technology as it had during the Cold War. But no sooner had the president’s stimulus program demonstrated that a new way forward on climate change and energy might be possible, then the new administration relinquished its climate change and energy policy to the partisans of the past.

A new administration is always an inchoate thing, a reflection of the divergent and conflicting interests that make broad and successful electoral coalitions possible. The Obama administration was no different, and when it came to energy and climate change, a tangled text of sub rosa commitments — to various carbon emissions targets and timetables, to making clean energy "the profitable kind of energy," to investing in clean coal, nuclear power, and solar tax credits — lay beneath the banner headlines about clean energy investments and green jobs.

As the new administration took shape, the question of how those various commitments would be reconciled was largely unresolved. But the senior team that Obama assembled to lead the administration’s climate change and energy efforts held some clues. Chu, as it turned out, was the only prominent energy technology advocate given a senior role in the administration. Virtually every other key policy role was filled by environmental regulators — former Environmental Protection Agency (EPA) head Carol Browner as climate czar, former Browner aide Lisa Jackson as EPA administrator, and Nancy Sutley as chair of the White House Council on Environmental Quality.

Putting Browner, a former Al Gore aide, in charge of climate-change policy was payback to environmental groups and the green donors who had supported Obama’s campaign. But it also signaled that, inside the White House, the clean energy investment message that the president had used to such great effect in winning battleground states like Ohio and Colorado was seen as just that: a powerful message to use in the campaign, not a policy priority.

In this, Obama was following two decades of magical thinking among both greens and liberal Democrats about energy technology. In this view, energy efficiency pays for itself, solar and wind power are already nearly cost competitive with fossil fuels, and both can quickly and cheaply reduce emissions. This Pollyanna view of fossil fuel alternatives and efficiency, which makes going green seem cheap and easy — little more than the cost of "a postage stamp a day" — has provided the justification for green-policy advocacy that has overwhelmingly focused on pollution regulations and carbon pricing while ignoring serious investment in energy research and development.

The price of Obama’s failure to break with green climate orthodoxy is only now becoming apparent. The collapse of international climate negotiations in Copenhagen last month was just the latest evidence that efforts to regulate global pollution output cannot succeed. The Kyoto framework, which imagined that carbon pollution limits could be the primary driver of the complete transformation of the global energy economy, has irretrievably failed.

The real technological obstacles to decarbonizing the global economy today represent an insurmountable obstacle to political efforts to limit carbon emissions. Until policymakers get serious about addressing the central technological challenge, all efforts to control carbon emissions are doomed.

Chewed Up

Steven Chu came to Washington expecting to manage a massive expansion of energy R&D. Chu had cut his teeth as a research scientist at the justly famed U.S. government-funded Bell Labs, which he saw as a model because they were responsible for inventing or developing a range of devices now part of the fabric of American life, from fax machines to TV transmission, radio astronomy, solar panel cells, the transistor, calculators, cell phones, Wi-Fi, and hundreds of other technological miracles.

Chu had never bought the idea that, in Al Gore’s words, "we have all the technology we need" to solve the climate problem. Instead, he told the New York Times that Nobel-caliber breakthroughs are required in chemistry, physics, and biology to make more efficient batteries, solar panels, and biofuels that can compete with fossil fuels in price, and that nuclear power is needed to displace coal.

Unfortunately, his view hasn’t shaped the actions of the administration or Democrats in Congress. By early spring it was clear that Democratic leaders on the House and Senate budget committees were not inclined to honor the president’s request for a dramatic scale-up of federal clean energy R&D and that the White House was not inclined to fight for it. And with greens and establishment Democrats fully lost in the magical idea that we can achieve massive emissions reductions through conservation, efficiency, and existing renewable technologies, there was scarcely any constituency inside the Beltway for the kind of big energy-technology program that Chu had hoped to launch.

Incumbent energy interests were happy to indulge the magical thinking by green groups and Democrats, who have been certain since Jimmy Carter’s administration that solar and wind are on the verge of becoming economically competitive with coal and oil. And so a deal was cut by green groups, coal utilities, and Reps. Henry Waxman and Ed Markey, who co-authored the legislation. Energy firms could purchase offsets rather than reduce their emissions for a far-off target date. The price of carbon dioxide would hover around $15 per ton — a far cry from the $70 per ton that Chu suggested would be needed to result in significant deployment of clean energy technologies. And utilities would be given trillions in free pollution credits even while raising energy prices for consumers.

The green giants in Washington — the Environmental Defense Fund (EDF), the Natural Resources Defense Council (NRDC), and the Center for American Progress (CAP) — claimed that cap and trade would constitute a breakthrough, and Chu dutifully defended the legislation, expecting it would include his $15 billion for R&D.

But Waxman and Markey ended up using virtually all of the money raised from carbon auctions to buy off fossil fuel interests, leaving virtually nothing for technology innovation. Believing that a carbon price — any carbon price — would work as a quasi-mystical "price signal" on the market, ushering in a world of solar farms and electric cars, they stiffed Chu.

In the end, Waxman-Markey would give R&D $1.1 billion a year, less than a third of current levels, and would give coal and utility companies $32 billion.

A Conjurer’s Trick

The Waxman-Markey legislation passed the House of Representatives last summer by a scant few votes, even as it became glaringly obvious to everyone who dared look that it would not require emissions reductions below business-as-usual levels.

Green groups insisted that the bill would reduce emissions and pointed reporters and green donors to allegedly independent analyses by the World Resources Institute (WRI). But the WRI, a major party to the cap-and-trade agreement negotiated by the EDF and NRDC with energy companies, simply used a magic accounting trick that was visible in plain sight: counting carbon offsets as real reductions of U.S. emissions.

Offsets typically fund activities such as tree planting and methane capture from landfills, and have proven over the last decade to be extremely unreliable, when they have not been outright fraudulent. The extensive offsets in Waxman-Markey would have allowed U.S. emissions to rise at business-as-usual rates over the next decade rather than declining to 17 percent below 2005 levels, as proponents of the bill claimed. Nevertheless, the WRI created graphs showing U.S. emissions magically going down 17 percent by 2020 and nearly 80 percent by 2050; the New York Times duly reprinted them; and partisans on both sides of the debate tacitly agreed to pretend as if proponents’ farcical claims about the bill’s mandated emissions reductions were true.

Doing so served all involved. The White House, Democrats in Congress, and national green groups could claim that progress was finally at hand to address climate change after eight years of Bush administration obstructionism. Republicans could attack the bill as a radical environmental plan to destroy the U.S. economy.

In this, domestic climate politics, like the international climate negotiations in Copenhagen, had become a simulacrum of reality. Democrats and Republicans had, in the course of a few short months, effectively switched policy positions on energy, with Democrats voting to hand trillions in new subsidies to coal-burning utilities and power plants while gutting Clean Air Act restrictions on the construction of coal-fired power plants, and Republicans, long-standing coal boosters, voting against a pro-coal bill.

But because hardly anybody other than the attorneys who were hired by the coal and energy companies to write the bill had actually read the 1,300-plus-page document, legislators, reporters, and greens alike evaluated the proposal on its symbols, not its substance. The bill’s introduction claims to cap emissions and expand clean energy, and though it would do neither, in the simulacrum that is global warming politics, these symbolic intentions were more than sufficient for Democrats and greens to proclaim the bill a "breakthrough" and for Republicans to vote en masse against it.

Incumbent energy interests had, in short, hijacked magical climate thinking for their own uses. They took cap-and-trade legislation and turned it into an opportunity for them to raise energy prices on consumers, invest a fraction of the higher revenues in clean energy, remove existing regulatory obstacles to the construction of coal plants, and lock in their competitive advantage while crowding out energy newcomers, including clean energy firms, for decades to come.

The legislation’s prominent defenders, like CAP’s Joseph Romm, labeled green critics of the bill "global warming deniers" and told anyone who would listen that Waxman and Markey had pulled a fast one on the coal lobby. Duke Energy’s James Rogers played along, offering to gladly repay the American public in emissions reductions after 2030 for billions in free allowance allocations today.

Hopenhaggling for a Miracle

For the better part of a decade, U.S. greens, liberals, and EU policymakers insisted that international efforts to reduce carbon emissions had floundered due to Bush administration intransigence. Once the United States put a serious plan to reduce its emissions on the table, the argument went, the rest of the world would get serious about reducing emissions.

But even with a domestic cap approved in the House, Senate leadership promising to follow suit, and the president promising to sign it, U.S. negotiators were unable to secure emissions reduction commitments from China, India, or other developing countries. The further the Obama administration stepped out on the limb, promising emissions reduction action that had not yet passed the U.S. Congress, the farther into the distance agreement receded.

After the realization that the Copenhagen summit would result in nothing — no new treaty, no emissions reductions, no new technology — the hunger for symbolism grew stronger. Greens formed the magic number 350 with their bodies, tweeted deliriously, and threw their lot in with tiny island countries like Tuvalu and the Maldives, which championed green demands for deeper emissions cuts. The United Nations hired an advertising agency to hokily brand the summit "Hopenhagen" and create a creepy movie about global warming earthquakes and tsunamis menacing a little girl’s dreams.

Under pressure from green groups, Obama agreed to parachute into the talks at the end instead of the beginning to bolster the perception that progress was being made. But the talks that Obama parachuted into were going far worse than anyone had expected. Attendees had not even been able to agree upon a series of symbolic agreements. China sent increasingly lower-level diplomats to meet with Obama and even tried to block developed countries from making binding emissions-reduction commitments.

A long night of shuttle diplomacy and tortured wordsmithing saved greens and U.N. officials from having to openly admit that climate negotiations had completely collapsed. Major emitters — China, India, Brazil, South Africa, and the United States — issued a joint communiqué pronouncing that they had agreed to keep negotiating among themselves. The United States made a nonbinding commitment to reduce its emissions under the auspices of the Waxman-Markey bill, should it, or something like it, ever pass. China agreed to keep its emissions to business-as-usual levels of growth through 2030.

When all was said and done, greens split over the denouement in predictable fashion. Grassroots greens cast Obama as Bush-lite and accused him of blowing up the talks and discrediting the United Nations as a venue for climate-change negotiations. National green leaders, who had spent the previous year insisting that progress toward capping U.S. carbon emissions would ensure the successful conclusion of a global emissions-reduction agreement in Copenhagen, pretended like they’d never suggested that the United Nation’s climate change conference could ever achieve such an outcome and praised Obama for ditching the United Nations and striking out to reach an agreement — any agreement — among major emitters.

But the intramural debate among greens about the utility of the United Nations as a venue for reaching emissions reduction agreements obscured the Copenhagen summit’s larger outcomes. The entire Kyoto framework for reducing carbon emissions died with the U.N. climate negotiations at Copenhagen. While mainstream greens praised Obama for ditching the United Nations and getting China and other developing countries to discuss making their own climate commitments, they continue to imagine that the final disposition of that process will be binding emissions-reduction agreements among major emitting countries.

But such an outcome is unlikely. China and other developing countries are unlikely to agree to binding emissions reductions, and the "national schedules" that some have proposed to take their place are unlikely to appease domestic constituencies in the United States and elsewhere concerned that domestic emissions-reduction commitments will further exacerbate the economic advantages that China and other developing economies have on their competitors in the developed world.

The Rise of Climate Realpolitik

The collapse of the Copenhagen talks marks not just the end of the United Nations as the primary venue for global climate negotiations but also the abandonment of binding emissions-reduction targets and timetables as the primary vehicle for achieving emissions reductions. Targets will continue to be tossed around, either as aspirational goals or as loophole-riddled sops to appease greens. But the real international action on climate change and energy will involve bilateral and multilateral negotiations to develop and deploy clean energy technologies.

Those negotiations will sometimes look like trade negotiations, sometimes like IMF negotiations, and sometimes like global agriculture or public health efforts. What they won’t look like is the impossible global pollution-output negotiations that have defined international efforts to address climate change since the Rio climate convention 18 years ago.

In the wake of the Copenhagen negotiations, leading green groups have doubled down on the passage of cap-and-trade legislation in the U.S. Senate in hopes of breathing life back into the global effort to regulate carbon emissions. Having now endorsed Obama’s abandonment of the U.N. process, greens have bet all their chips that Obama will show up to the next round of negotiations with major emitters with a domestic cap in hand.

Obama will no doubt make a show of attempting to do so. But should that effort fail, and its prospects are tenuous, there will be no hiding how profoundly the entire green framework for addressing climate change has failed.

The old Kyoto bogeymen, George W. Bush and Dick Cheney, have left the building, and Democrats control the largest congressional majority that either party has seen in a generation. Greens blame Republicans and fossil fuel "deniers," but the truth is that if cap and trade fails, it will fail due to a lack of Democratic votes and despite most of the U.S. energy industry backing the bill.

Midterm elections are likely to bring large Democratic losses in the House, and, fairly or not, a hard vote for failed cap-and-trade legislation will take a fair share of the blame. For House Democrats it will be déjà vu all over again. In 1994 they went out on a limb and voted for an energy tax (known as the Btu tax) pushed by then-Vice President Al Gore and President Bill Clinton’s White House only to see the Senate reject such a measure. Having been "BTUed" by two Democratic administrations, twice-fooled Democrats are unlikely to sign up for more of the same in the next Congress. And cap and trade’s death in the Senate would likely signal its death everywhere — Australia, Japan, Canada, and eventually even Europe.

In the end, whether or not the Senate passes a cap-in-name-only climate bill, the long-term failure of Kyoto and all other efforts to establish binding emissions caps is virtually assured and is a function of a basic technological problem. We simply do not have low-carbon technologies today that can at large scale replace fossil fuels at a cost that any political economy in the world is willing to impose upon itself. There will be no political solution to climate change, no binding international agreement to substantially reduce emissions, and no effective domestic carbon cap until low-carbon technologies are much cheaper than they are today.

Unfortunately, pointing out this now fairly evident reality is viewed by most greens as an act of bad faith. In the simulated world of Hopenhagen, below-cost energy efficiency can deliver emissions reductions too cheap to meter; solar and wind power are already cheaper than coal; and "political will" along with new regulations and a modest carbon price will deliver technological miracles.

However, the technologies we need will not materialize in response to carbon prices or emissions caps. Nor will they arrive, as many conservatives would have it, by getting the government out of the way and simply allowing a new generation of Steve Jobs and Bill Gates to tinker away in their garages.

Rather, we need to create a new clean energy economy in the same way we created our information economy: by identifying a set of well-defined technical problems and mobilizing the human resources of our technologically advanced civilization — our scientists, laboratories, universities, and engineers — to solve them.

These technical questions are not difficult to grasp and in fact have already largely been laid out by Chu in his remarks to the New York Times. How do we convert sunlight into energy much more efficiently than solar panels do today? What combination of chemicals can store more energy in batteries that are smaller and lighter? How can we manufacture a next generation of self-contained nuclear reactors that are safer, smaller, and cheaper than the large ones of the 1950s and 1960s? And how can we engineer new biological organisms to serve as a cheap fuel alternative to oil?

Solving global warming’s technology challenges will require not a single Apollo program or Manhattan Project, but many. We need to solve technical problems across a range of technologies and at a variety of stages along the road from technological development to demonstration to commercialization to mass deployment.

Leaving the comfortable precincts of Hopenhagen means taking a hard look at our current predicament. A sober assessment will acknowledge that fossil fuels are remarkable sources of energy — cheap, energy dense, and widely available. That’s why oil, coal, and gas will not be easily displaced by present-day renewable-energy technologies that are expensive and intermittent, or by energy-efficiency measures that are more expensive to implement than their proponents have been willing to admit. Nor will green lifestyles and energy conservation reduce the average American’s energy consumption 80 percent over 40 years.

Properly chastened, we will turn away from the phony certainty and faked urgency that proponents of today’s failed, top-down, target-based approach trade in. Claims that we don’t have time to wait for technological breakthroughs and the related demands for policies that supposedly guarantee rapid and assured emissions reductions have only served to delay the technological day of reckoning.

The hard work of mobilizing the resources and institutions necessary to engineer our way to a low-carbon economy will look profoundly different from both the histrionics at Copenhagen and the slick sales pitch offered by carbon traders in Washington. International agreements to share the burden and the benefits of developing better and cheaper low-carbon energy technologies will represent the central focus of international climate negotiations. Such agreements will extend well beyond simply agreeing to underwrite more laboratory research. They will require large financial commitments to demonstrate these technologies and create physical and institutional infrastructures that can support their commercialization.

Transforming the global energy economy from fossil fuels to low-carbon alternatives over the next 50 to 100 years is such a monumental technological undertaking that it is quite understandable that many would either declare it impossible or retreat into magical thinking. We must resist these temptations.

Solving the technology challenge will not be easy, but in terms of our collective wealth and knowledge we are in a better position today than at any other point in our history. In the end, global efforts to address the climate challenge, if they are to succeed, must centrally focus upon the creation of a new and extraordinarily important global public good: the development of low-carbon energy technologies that are cheap, clean, and abundant. After two decades of domestic and international failure to take real action on climate change, it is time for the purveyors of magical thinking to take their exit so that the main act can begin.

Related Stories

John HannahJohn Hannah is a senior fellow at the Foundation for Defense of Democracies, focusing on U.S. strategy. During the presidency of George W. Bush, he served for eight years on the staff of Vice President Cheney, including as the vice president's national security advisor. | Shadow Government |